The government on Tuesday extended the interest subvention scheme to banks to ensure availability of crop loans of up to Rs 3 lakh to farmers at 7 per cent per annum.

“The Union Cabinet has given its approval to continuation of interest subvention to public sector banks (PSBs), private sector commercial banks, regional rural banks (RRBs), cooperative banks and NABARD to enable them to provide short-term crop loans of up to Rs 3 lakh to farmers at 7 per cent per annum during 2015-16,” sources said.

The sources further said the Cabinet has approved an additional interest subvention of 3 per cent per annum for those farmers who repay on time.

They added that it decided to provide interest subvention to small and marginal farmers with Kisan Credit Cards for loans against negotiable warehouse receipts post-harvest at 7 per cent per annum interest for six months.

The Union Cabinet, chaired by Prime Minister Narendra Modi, also decided to provide relief to farmers affected by natural calamities, where the interest subvention of 2 per cent will continue to be available to banks for the first year on the restructured amount, they said.

For 2015-16, the target of agriculture credit has been raised to Rs 8,50,000 crore, from Rs 8,00,000 in 2014-15.